Wis­con­sinites fear gover­nor is giv­ing Fox­conn the house

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - SCOTT BAUER

MADI­SON, Wis. — Con­cerns are in­creas­ing among law­mak­ers and oth­ers in Wis­con­sin over the in­cen­tives the state is of­fer­ing to be­come the first U.S. home of Tai­wanese elec­tron­ics gi­ant Fox­conn.

Lit­tle has been re­vealed about what tax breaks, sub­si­dies, free land and other fi­nan­cial in­cen­tives or prom­ises Repub­li­can Gov. Scott Walker and state eco­nomic de­vel­op­ment of­fi­cials are ex­tend­ing to seal the deal with Fox­conn, the big­gest con­tract as­sem­bler of smart­phones and other de­vices for Ap­ple and other brands.

Fox­conn has said Wis­con­sin is com­pet­ing with

Michi­gan, Ohio, Penn­syl­va­nia, Illi­nois, In­di­ana and Texas for its first U.S. fac­tory with bil­lions of dol­lars in in­vest­ments and thou­sands of new jobs. Fox­conn wants to build the coun­try’s first liq­uid-crys­tal dis­play fac­tory and pos­si­bly other op­er­a­tions in the U.S. An an­nounce­ment on Fox­conn’s plans could come as soon as this week.

Walker has re­fused to con­firm that he’s ne­go­ti­at­ing with Fox­conn. State law­mak­ers have said “huge, big num­bers” are be­ing dis­cussed, but even they don’t know the de­tails. Michi­gan re­cently ap­proved a $200 mil­lion an­nual job-cre­ation tax in­cen­tive pack­age to sweeten its of­fer to Fox­conn.

“I hope that cooler heads pre­vail when putting these in­cen­tive pack­ages to­gether,” Steve Deller, a Univer­sity of Wis­con­sin-Madi­son pro­fes­sor of agri­cul­ture and ap­plied eco­nomics, said Tues­day. “Some­times states get so caught up in play­ing the game that they lose sight of the costs these in­cen­tives in­cur. Wis­con­sin has his­tor­i­cally not played that game.”

Tom Still, pres­i­dent of the Wis­con­sin Tech­nol­ogy Coun­cil, ex­am­ined deals made in six other states to land large man­u­fac­tur­ers. Based on those,

if Fox­conn is look­ing to build a plant that em­ploys 10,000 peo­ple in Wis­con­sin, the state may have to of­fer $2 bil­lion in in­cen­tives to be paid over a pe­riod of years, Still said.

Whether it’s worth the cost is “a cal­cu­la­tion that pol­i­cy­mak­ers will have to make,” Still said, but he thinks it would be a good deal “be­cause of what a game-changer this could be for Wis­con­sin.”

Democrats who are in the mi­nor­ity in the Leg­is­la­ture have been kept in the dark, said two mem­bers of the bud­get-writ­ing com­mit­tee. State Sen. Jon Er­pen­bach is wor­ried that Walker may make prom­ises that re­quire leg­isla­tive ap­proval, then blame law­mak­ers if they don’t go along be­cause of the cost.

“It’s a balance be­tween mak­ing sure tax­pay­ers are pro­tected and we’re not giv­ing away the store for the po­lit­i­cal gain for Scott Walker,” Er­pen­bach said. “If it’s a deal for both sides, that’s great.”

Deller is also con­cerned that Walker — ea­ger to bol­ster his re­sume as a job-cre­ator as he heads into re-elec­tion next year — may give up too much. Walker ran in 2010 on the prom­ise to cre­ate 250,000 jobs but still hasn’t hit the mark.

“If I was in the gover­nor’s shoes, I would be mak­ing a very sweet of­fer from the per­spec­tive of the com­pany,” Deller

said. “A sweet of­fer from the per­spec­tive of Wis­con­sin tax­pay­ers? Maybe not.”

Deller said that in ad­di­tion to the cost to state tax­pay­ers, schools and lo­cal gov­ern­ments could also be pinched be­cause deals to large com­pa­nies of­ten al­low them to es­cape pay­ing prop­erty taxes, which pay for some lo­cal ser­vices.

There are also unan­swered ques­tions about the qual­ity of jobs that would be cre­ated, how much they would pay and how long they would last. Fox­conn has re­placed at least 40,000 of its work­ers in China with robots.

But Demo­cratic state Rep. Gor­don Hintz of Madi­son said he’s op­ti­mistic be­cause of what a large fac­tory could mean to the state.

“I just hope we get this right,” he said.

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